Project Titus: market-based liquidity efficiency in RTGS systems

12 November 2025

Project Titus investigates how auction mechanisms and side-payments can enhance liquidity efficiency in real-time gross settlement (RTGS) systems. While RTGS eliminates settlement risk, it also increases banks' demand for intraday liquidity. Traditional liquidity-saving mechanisms (LSMs) address this challenge through queuing and netting, but these methods rely on prefunded queues and often default to arbitrary payment ordering once liquidity is exhausted.

Titus introduces an auction-based LSM that allows participants to submit bids reflecting their willingness to pay for or receive compensation in exchange for liquidity. When aggregated bids exceed a positive threshold, the auction clears, and side-payments automatically redistribute liquidity costs among participants. This market-driven process aligns incentives, improves efficiency, and can be executed in short, periodic settlement cycles.

The project tested this approach using RTGS transaction data under various system configurations and operational policies. Results showed that the auction-based mechanism achieved high clearing rates and significant liquidity savings compared to standard RTGS settlement. Performance was found to depend on system design and queue management strategies.

Beyond immediate applications to current RTGS infrastructures, Titus provides a conceptual framework relevant to emerging tokenised and instant payment systems, where liquidity pressures may again become critical. By combining economic theory, agent-based modelling, and real transaction data, the project demonstrates that liquidity efficiency and timely settlement can coexist through transparent, incentive-compatible market mechanisms.

Although still a proof of concept, Project Titus illustrates how innovative market design can strengthen the resilience, efficiency, and adaptability of core payment systems operated by central banks.